Basel Ii Implemenatation Essay

4566 Words Jun 29th, 2014 19 Pages
Research Title

Basel II Capital Accord and implementation implications in Albania

Prepared: Elda Lila

Mentor : Professor William Handorf, Ph.D.,

July 2007

Abstract: Basel II Capital Accord and implementation implications in Albania 2

Abstract: Basel II Capital Accord and implementation implications in Albania 2

I. What is New Basel Capital Accord and its Evolution 4

II. Adoption of Basel II 5

BCBS Countries 5

In Other Countries 6

Banking Supervision Improvement Priorities 6

III. History of Banking Supervision in Albania (Banking System in Albania and Supervisory Process. 7

IV. Three Pillars of Basel II and the implications related to the implementation in Albania: 10

1.Pillar 1 –
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The implementation plans vary from country to country, but the trend is to put the simpler, less risk sensitive approaches in place before the more complex, more risk sensitive approaches. III. The third part is about the history of banking system in Albania and supervisory process. The banking system in Albania is still a new and developing one, although there are big developments in the last years. Albania was the last of the central and eastern European countries to embark upon democratic and free market reforms.
Banking sector, even though operating in not-well informed (educated) banking environment, has represented a tendency to grow since 1992. The developments in Albanian financial system and banking require a more risk-oriented supervision process. IV. The fourth and the last part explain three Pillars of Basel II and the implications related to the implementation in Albania. Basel II is structured around three so-called pillars: Pillar 1 – Capital Defined Pillar 2 – The Supervisory Review Process Pillar 3 – Market Disclosure
Each national supervisor needs to carefully consider Basel II's benefits, taking into account the characteristics of its own domestic banking system. IS Albania ready to implement Basel II? The answer is: not yet in the short run. For Albania more time will be needed for laying the groundwork for the adoption of Basel II.

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